Merchant Banking Operations in Banglades

Term Paper on
Merchant Banking Operations in Bangladesh

Investment Analysis and Portfolio Management
FIN 3203
Supervised by,
Md Hassan Uddin
Associate Professor
Adjunct Faculty, Faculty of Business Studies
Bangladesh University of Professionals
Date of submission: November 3, 2019
i
Name ID Signature
Fahim Ahmad 17221031
Syeda Sumya Zaman 17221033
Mrittika Sadi 17221035
Labib Hasnath 17221037
Ekhtear Ahmed 17221039
Md Mostafa Asef Rafi 17221041
Samin Sakib 17221045
Khondokar Md. Abu 17221047
Syed Saikat
Fathan Sakib 17221049
Jenifer Trisha 17221051

3rd November, 2019
Md Hassan Uddin
Associate Professor
Adjunct Faculty, Faculty of Business Studies,
Bangladesh University of Professionals
Subject: Submission of the term paper report on the topic “Merchant Banking Operations in
Bangladesh”.
Dear Sir,
With due respect we are reporting you the term paper titled “Merchant Banking Operations in
Bangladesh” for the course ‘Investment Analysis and Portfolio Management’ (FIN-3203).
We have tried our best to do the research properly considering every trifle thing you advised
and make the report in a fascinating way.
We, therefore, eagerly believe that this term paper report will meet your specification and
contentment.
Sincerely,
Fahim Ahmad
Syeda Sumya Zaman
Mrittika Sadi
Labib Hasnath
Ekhtear Ahmed
Md Mostafa Asef Rafi
Samin Sakib
Khondokar Abu Syed Saikat
Fathan Sakib
Jenifer Trisha
Batch-2 (2017)
Section- A
Department of Business Administration in Finance and Banking

Statement of Authorship
We, hereby, state that the report we are submitting is entirely our authentic work. The report
has not been used other than the stated sources that marked on the reference part which has
been quoted either literally or by content from the used sources. It’s assured that the contents
or parts of it have not been copied from any report. We are aware of the regulations
concerning plagiarism, including those regulations concerning disciplinary actions those may
result in plagiarism. Any use of the work of any other author, in any form, is properly
acknowledged at their point of use.
Student’s name:
1. Fahim Ahmad
2. Syeda Sumya Zaman
3. Mrittika Sadi
4. Labib Hasnath
5. Ekhtear Ahmed
6. Md Mostafa Asef Rafi
7. Samin Sakib
8. Khondokar Abu Syed Saikat
9. Fathan Sakib
10. Jenifer Trisha
Date of Submission: 3rd Novemeber.2019

Acknowledgement
First of all, we would like to thank the almighty Allah for whose kindness we have managed
successfully to complete the term paper report properly and thoroughly with a sound health.
Then, we would like to give the credit to our course teacher Md. Hasan Uddin. Without his
proper guidance and techniques, it would be tough enough for us to complete the term paper
report in a proper way on time. We are also thanking him for assigning us the related topic.
Actually, this ensured our dexterity enough regarding this area.
Finally, we would like to thank our friends, seniors and different online sources. Without
helping of them, it was pretty tough to create the pattern and accumulate important
information in the term paper.
Thanks to all of you

EXECUTIVE SUMMARY
A merchant bank is a company that conducts underwriting, loan service financial advising,
and fundraising services for large corporations and high net worth individuals. In Bangladesh
the establishment of merchant bank added value to the stock market which plays a vital role
in the progress of economic development. The purpose behind furnishing this paper is to
study and evaluate operations of different merchant banks of Bangladesh. For this, five
renowned merchant banks of Bangladesh have been chosen from where we will be collecting
our primary data. Sources of secondary data collection are different business portals (offline
and online both) finance related websites of Bangladesh. Our probable finding from this
paper is to detect the functions and services rendered by the merchant banks of Bangladesh
and to analyze them through a comparative study. Our paper can be of great value for the
merchant banks as well as for the future generation as it can be a guideline form them and for
the merchant banks it will be chance to renovate themselves by knowing their weaknesses
which will be resulted from our extensive analysis. Moreover, we will try to input some
recommendation that may be beneficial for the banks.
LIST OF ABBREVIATIONS
EBIL Eastern Bank Investment limited
CBCRL City bank Capital Resource Limited
ABBIL AB Bank Investment Limited
LBIL Lanka Bangla Investment Limited
IDLCIL IDLC Investment Limited

Table of Contents
CHAPTER ONE...................................................................................................................................1
INTRODUCTION................................................................................................................................1
1.1......................................................................................................: BACKGROUND OF THE STUDY 2
1.2.....................................................................................................: STATEMENT OF THE PROBLEM 3
1.3...........................................................................................................: OBJECTIVES OF THE STUDY 4
1.4....................................................................................................: METHODOLOGY OF THE STUDY 4
1.5........................................................................................: SCOPE AND RATIONALE OF THE STUDY 5
1.6.........................................................................................................: LIMITATIONS OF THE STUDY 6
1.7.........................................................................: ORGANIZATION AND STRUCTURE OF THE STUDY 6
CHAPTER TWO..................................................................................................................................7
OVERVIEW OF THE MERCHANT BANKS IN BANGLADESH..................................................................7
2.1 HISTORY OF MERCHANT BANKS IN BANGLADESH.......................................................................8
2.2...........................................................................................: OVERVIEW OF THE SELECTED BANKS 9
CHAPTER THREE..............................................................................................................................11
MERCHANT BANKS’ OPERATIONS IN BANGLADESH........................................................................11
3.1: DEFINITION OF MERCHANT BANKS......................................................................................................................... 12
3.2..............................................................................................: FUNCTIONS OF MERCHANT BANKS 13
3.3: SUMMARY OF THE CHAPTER................................................................................................................................... 15
CHAPTER FOUR...............................................................................................................................16
ANALYSIS AND INTERPRETATION OF DATA....................................................................................16
4.1: ISSUE MANAGER...................................................................................................................................................... 17
4.2: FINANCIAL STATEMENT ANALYSIS........................................................................................................................... 18
4.3.........................................................................: PRACTICES IN THE SELECTED MERCHANT BANKS 30
4.4: SUMMARY OF THE CHAPTER................................................................................................................................... 36
CHAPTER FIVE.................................................................................................................................37
FINDINGS AND RECOMMENDATIONS.............................................................................................37
5.1: FINDINGS OF THE STUDY......................................................................................................................................... 38
5.2: RECOMMENDATIONS............................................................................................................................................... 38
CHAPTER SIX...................................................................................................................................39
SUMMARY, POLICY IMPLICATIONS AND CONCLUSION...................................................................39
6.1: SUMMARY OF THE FINDINGS.................................................................................................................................. 40
6.2: POLICY IMPLICATIONS............................................................................................................................................. 40
6.3: CONCLUSION............................................................................................................................................................ 40
REFERENCE.....................................................................................................................................41
APPENDIX.......................................................................................................................................42
List of Tables
TABLE 1 LIST OF ISSUE MANAGER................................................................................................................... 18

TABLE 2 OPERATIONAL PROFIT GROWTH..................................................................................................... 18
TABLE 3 PROFIT AFTER TAX GROWTH........................................................................................................... 19
TABLE 4 RETURN ON EQUITY............................................................................................................................. 20
TABLE 5 NET PROFIT MARGIN.......................................................................................................................... 21
TABLE 6 DEBT TO EQUITY RATIO..................................................................................................................... 22
TABLE 7 EARNING PER SHARE.......................................................................................................................... 23
TABLE 8 TAX MANAGEMENT EFFICIENCY.................................................................................................... 24
TABLE 9 INVESTMENT IN SECURITIES............................................................................................................. 25
TABLE 10 MARGIN LOANS.................................................................................................................................. 26
TABLE 11 FEES AND COMMISSIONS................................................................................................................. 27
TABLE 12 INTEREST INCOME.............................................................................................................................. 28
TABLE 13 INVESTMENT INCOME....................................................................................................................... 29
TABLE 14 FREQUENCY TABLE OF FACTOR 1.............................................................................31
TABLE 23 FREQUENCY TABLE OF FACTOR 10...........................................................................35
List of Figures
FIGURE 1 OPERATIONAL PROFIT GROWTH GRAPH..................................................................................... 19

FIGURE 2 PROFIT AFTER TAX GROWTH GRAPH.......................................................................................... 20
FIGURE 3 RETURN ON EQUITY GRAPH............................................................................................................ 21
FIGURE 4 NET PROFIT MARGIN GRAPH.......................................................................................................... 22
FIGURE 5 DEBT TO EQUITY RATIO GRAPH.................................................................................................... 23
FIGURE 6 EARNING PER SHARE GRAPH.......................................................................................................... 24
FIGURE 7 TAX MANAGEMENT EFFICIENCY GRAPH.................................................................................... 25
FIGURE 8 INVESTMENT IN SECURITIES GRAPH............................................................................................. 26
FIGURE 9 MARGIN LOANS GRAPH.................................................................................................................... 27
FIGURE 10 FEES AND COMMISSIONS GRAPH................................................................................................ 28
FIGURE 11 INTEREST INCOME GRAPH............................................................................................................. 29
FIGURE 12 INVESTMENT INCOME GRAPH...................................................................................................... 30
FIGURE 13 FINANCIAL STATEMENT OF EBLIL.........................................................................43
FIGURE 14 FINANCIAL STATEMENT OF ABBIL.........................................................................45
FIGURE 15 FINANCIAL STATEMENT OF CBCRL........................................................................47
FIGURE 16 FINANCIAL STATEMENT OF LBIL............................................................................49
FIGURE 17 FINANCIAL STATEMENT OF IDLCIL........................................................................51
FIGURE 18 PIE CHART OF RESPONSES FOR FACTOR 1...............................................................52
FIGURE 22 PIE CHART OF RESPONSES FOR FACTOR 5................................................................54
FIGURE 27 PIE CHART OF RESPONSES FOR FACTOR 10.............................................................56
FIGURE 30 QUESTIONNAIRE PART 1..........................................................................................58
CHAPTER ONE
INTRODUCTION
1
1.1 : Background of the Study
The capital market is an intermediation through which the surplus cash of the general public
can be activated and diverted into gainful speculations with the possible point of encouraging
improvement of the nation's economy. Merchant banks contributes enormously for the
advancement of progressively validated and organized capital market and structures an
increasingly steady economy. It serves the country by creating generation, business and
gaining outside money just as improving the establishment of capital market through value
speculation interest. The core business of merchant banking includes the executive
administrations, portfolio the board administrations and endorsing administrations.
According to Animesh, Globalization of Indian Economy has made the whole economy
open, that has move worldwide player in time of the money related administrations.
Government has now open up the entryways of speculations particularly in the territory of
banks and protection which prompts focused condition for the present players. The
investigation additionally uncovered that in India, at present, a generous number of Merchant
Bankers are working under the immediate supervision of Securities and Exchange Board of
India (SEBI) and furthermore assessed the presentation of chose Merchant Bank of India.
Nayak has discovered in his research that conventional merchant banking movement in India
was begun in 1969 with Merchant Banking Divisional set up by the Grindlays Bank. He has
paid attention to that the principle administration offered around then to the corporate
endeavors by the dealer banks incorporated the administration of open issues and a few parts
of budgetary consultancy. The early and mid-seventies have seen a blast in the development
of merchant banking associations in the nation with different commercial banks, financial
organizations and brokers organizations entering in to the field of merchant banking.
In another study, Shreyas has concentrated on the general perspective on merchant banking
in past just as present regarding India. The investigation has revealed that Merchant banking
is one of the most established and concentrated budgetary go-betweens in the essential market
and its movement has grown quickly in the Indian capital market with in excess of 1450
vendor investors and more than 930 has enlisted with SEBI. Merchant banking in India has
an exceptionally splendid future in the coming years and has all potential in contending with
International nations.
Biswajit and Pranab has inspected in their study that merchant banking is a wanted creative
advance embraced by the business banks in India. The investigation has centered that the
requirement for merchant banking was stressed by the Banking Commission (1972) and as
per the commission, merchant banking foundations are to offer reserve dependent on non-
subsidize based administrations like syndication of financing, advancement of undertakings,
venture, the board and warning administrations to medium and little savers and to give assets
and trusts to different sorts and so forth. Their fundamental capacity is to direct the readiness,
arranging, assessment and execution of ventures which are useful to the development of
enterprises.
Another study says that privatization and globalization has progressed toward becoming
watch words today. The Government of India has received the new changed monetary
strategy from July 1991 and one of the primary plans of the new arrangement is banking
changes. In this procedure of changes the significance of Merchant Banking ought not be
ignored. The entire financial framework in India and abroad will undoubtedly change in the
subsequent thousand years. Merchant banking can't be a special case.
In Bangladesh, new business visionaries are confronting intense deficiency of capital. There
is certainly not a solitary investment bank in the nation which could give direct value assets
to the business visionaries and in that circumstance merchant banks assume the job of venture
banks. Merchant banks assume significant jobs in posting protections with stock trades. It
incorporates subsidize for business people from numerous points of view like Initial Public
Offering (IPO), Repeat Public Offering (RPO), Rights Share Offer, and Direct Listing for
selling of existing paid-up capital, issue of inclination offer, convertible or non-convertible in
offers.
In order to scrutinize the functions rendered by the merchant banks of Bangladesh

extensively this paper has been furnished.
1.2 : Statement of the Problem
The key focus in this study is to detect and analyze the operations that merchant banks do as
their activities. That means the financial performance of those firms, in which type of
industries they are investing according to the rules and regulations, what are the functions
they are currently focusing etc. Apart from that, the analysis of different financial statements
(ratio analysis), different financial heads related to the operational activities of merchant
banks, solutions of these things are the main concern in this study.
1.3 : Objectives of the Study
The objectives of the study are segregated mainly into two parts. They are as follow:
o Principal objective: The fundamental objective of this study is to find out the overall
systems about the operations of merchant banks in Bangladesh.
o Secondary objectives: To achieve the principal objective, there are a lot of important
things need to be figured out. So, in this study the secondary objectives are like to
appraise the financial performances of the selected merchant banks of the country
Bangladesh, to make a deep analysis of the financial statements to attain the first
secondary objective. Besides, the cultures and practices those will vary from bank to
bank will also be covered in this study. Apart from these, the recommendation of
remedial measures for the development of the selected merchant banks of Bangladesh.
1.4 : Methodology of the study
The reason for this study was to investigate the operations/roles of Merchant Banks in
Bangladesh. Both primary and secondary data were utilized to conduct the study. Primary
data has been collected from the five selected merchant banks of Bangladesh for this study
and the secondary data have been collected from annual reports, financial portals, stock
exchanges website and other scholarly websites. The collected data were then analyzed by the
help of SPSS software.
1.4.1 Population and Sample size: There are 63 merchant banks in Bangladesh. For
the sake of this study we have chosen five renowned merchant banks of Bangladesh in
order to extract Primary as well as Secondary data. The sample size of this study has
been determined by using the following formula suggested by Yamane (1967).
𝑁
𝑛=
1 + 𝑁(𝑒)2
Where n is the sample size, N is the population size, and e is the level of precision. In
calculating a number of samples, the following assumptions were made to determine,
n=150, if Population Size is more than 100000; Level of precision is 7%.
1.4.2 Data Collection: The sample respondents were selected by using the
convenience sampling method. 150 data were collected through direct interview
which were used in the analysis of this study.
1.4.3 Questionnaire Design & Test of Reliability and Validity: The study
interviewed 150 employees from the selected Merchant Banks of Bangladesh. A
structured questionnaire with 12 items relating to the operations of Merchant Banks of
Bangladesh were used to collect the data. Responses to all the statements in the
questionnaire were measured on a five-point scale ranging from 1 to 5 with 1
indicating strongly disagree and 5 indicating strongly agree. One of the relative
advantages of using this scale is its suitability for the applications of multifarious
statistical tools used in marketing and social research study. The reliability of the
questionnaire is calculated as 0.850 which is acceptable as per Nunally (1967).
Cronbach's Alpha N of Items
0.850 12
Moreover, all the items incorporated in the questionnaire was valid which was
extracted from Reliability Analysis.
Case Processing Summary

N %
Cases Valid 150 100.0
a
Excluded 0 .0
Total 150 100.0
1.5 : Scope and Rationale of the Study
There are 57 merchant banks in Bangladesh. The only scope and goal are to find out the
activities of the merchant banks of Bangladesh through analyzing the activities and services
entered by the five selected merchant banks of Bangladesh for this study. This study
incorporates existing literature and relevant articles on the performance of merchant bank.
This study also analyzed five years data i.e. from 2013-18 of the selected banks of
Bangladesh in order to evaluate their financial performance.
Financial institutions of a nation assume a significant job in structure the budgetary spine of
the nation's financial matters. Thinking about merchant banking exercises isn't just significant
to be a future merchant banker yet in addition fundamental for taking venture choice. As the
students doing major in Finance and Banking, it is important for them to know about the
capital market.
1.6 : Limitations of the Study
o Time Constraint: The deadline which was allocated to conduct this study was not
more than enough. Comparatively a lengthy time was needed to do a profound
analysis and to present the result in more fascinating way.
o Unavailability of data: This was a big challenge to conduct this study. In case of
primary data collection, due to the secrecy problem, the respondents were not ready to
share many information relevant to the study. Besides, in case of secondary data
sources, the reliability of the data may be a question. There was a lot of important
things which were being expected to get from secondary sources but those were not
available in the secondary sources as well.
o Fund Constraint: As the authors of this study, all are just undergrad students, they
didn’t get any fund to conduct this research appropriately since the task was only for
the fulfillment of an undergrad course, so the fund was another constraint to this
study.
1.7 : Organization and Structure of the Study
After an introductory part of the study, in the 2nd chapter of the study, an overview of the
merchant banks in Bangladesh has been discussed, where the chapter is incorporated a brief
history of merchant banks in Bangladesh and a small overview on the selected banks for this
paper. In the third chapter we will explore the functions rendered by the merchant banks of
Bangladesh. In the fourth chapter we will analyze, interpret and compare the extracted data
from the sources. The result of this chapter will be compiled in the fifth chapter under the
heading of “Findings”. The sixth chapter will be on some fruitful recommendations for the
merchant banks on the basis of their limitations. Lastly, we will conclude the paper with a
policy implication and a conclusion.
CHAPTER TWO
OVERVIEW OF THE MERCHANT BANKS IN BANGLADESH
2.1 History of merchant Banks in Bangladesh
The idea of merchant banking is in an improvement stage in our nation. Administrative

bodies and Government are continually attempting to build up the capital market centering
the welfare of the financial specialist through structure a stable and verified market. The main
ever stock trade appeared in Bangladesh (at that point East Pakistan) for the sake of "East
Pakistan Stock Exchange Association Ltd". It took two years more to dispatch its
conventional activity. 1964, the name of East Pakistan Stock Exchange Limited was changed
to "Dacca Stock Exchange Ltd." Investment Corporation of Bangladesh (ICB) was the
pioneer in the nation that has performing with solid notoriety in the nation's capital market
spreading its exercises in every one of the fragments of capital market. In 1987, the
Bangladesh Government gets ready and shows the Securities and Exchange Rules. In 1993,
DSE made stride ahead to refresh its everything offers value file based on the plan proposed
International Finance Corporation (IFC). In 1994, Securities and Exchange Commission
(SEC) distributed principles in regards to the exercises of sellers and representatives. The title
of the guidelines is set (Stock-vendors, Stock-specialists and Sub intermediaries). In 1996,
SEC presents SEC (Merchant Baker and Portfolio Manager) Regulations, alongside SEC
(Mutual Funds) Regulations, 1996. But the exercises of ICB, merchant banking in
Bangladesh had begun their exercises. There were no lawful commitments of the guarantor
organizations to draw in an issue trough at the time security issue. In 1997, some bank and
non-banking association offer proposition to get the consent of work merchant banking
activity. In 1998, DSE presented computerized exchanging; it is an incredible leap forward
both for the nation and stock trade. IDLC of Bangladesh got permission as the first full-
fledged merchant banker. It is the main authorized undeniable dealer investor in the nation.
Another 10 undeniable shipper broker presents in this. In 1999, another
5 non-banking association began as full-fledge merchant banker. Prime Finance and
Investment Limited began their full-fledge merchant banking activity from this year. In 2000,
only one non-banking association presented as a full-fledge merchant banker. In 2001, Prime
Bank and Arab Bangladesh Bank began their activity as a merchant banker, another 2 non-
banking association began their merchant banking activity. From 2002 to 2009, 10 more
merchant banker are presented and the vast majority of them are private business banking
association. The number of full-fledged merchant bank at present is 43.
2.2: Overview of the selected Banks
2.2.1: City Bank Capital Resource Limited- CBCRL have been operating in the Capital
Market since 2010 as division of The City Bank Ltd. CBCRL has acquired full-fledged
Merchant Banking License from the Bangladesh Securities and Exchange Commission
(BSEC) in 2010. It is a wholly owned subsidiary of The City Bank Ltd. It is one of the largest
private commercial banks in Bangladesh with a paid-up capital of BDT 2.55 billion.
Recently, the company is providing a broad range of investment banking such as portfolio
management, corporate advisory, structured finance and impact investment services to
institutions, high net worth individuals and financial sponsors. City Bank Capital strives to
cater to international and local clients with investment banking and consulting solutions to
sustain, enable and catalyze growth to clients and stakeholders and their mission is to bring
Bangladesh to the frontier of global finance.
2.2.2: EBL Investment Limited- EBL Investments Limited (EBLIL) from its inception
2013, have been elevating its capacities to meet the demands of changes, to serve its clients
better. EBL Investments Limited is a Limited company, obtaining merchant bank license
from the Securities and Exchange Commission. EBLIL provides a full range of investment
banking facilities including conventional merchant banking activities. In its short record,
EBLIL has already achieved substantial dignity and fame in managing public offerings
efficiently. Public issues, initial and rights, managed by EBLIL have received encouraging
market response. EBLIL team focuses on originating, structuring, underwriting and executing
debt financing including syndications of both foreign and local, corporate bonds, and other
debt linked products. EBLIL also has a strong foothold in Mergers & Acquisitions and
private equity, aligning the goals of those who seek to funding for joint venture opportunities
in Bangladesh. Their vision is to be the most innovative leading Merchant Banker in
Bangladesh Capital Market in terms of efficiency, excellence, transparency, and
professionalism having maximum market shares by 2021 and their mission is To build the
merchant bank into an efficient, market driven, customer centric, service oriented, profit
making full-fledged operating unit in the capital market of Bangladesh through a continuous
process of capacity building.
2.2.3: LankaBangla Investment Limited- LankaBangla Investments Limited (LBIL) a fully

owned subsidiary of LankaBangla Finance Limited, one of the leading Non-Banking
Financial Institutions in Bangladesh. LBIL is engaged in providing investment banking
services and Investment Management Services for its clients. LBIL has positioned itself
prominently in
investment banking through its wide range of investment banking product services and broad
client base.
2.2.4: AB Bank Investment Limited- AB Investment Limited (ABIL), a company limited

by shares has incorporated in Dhaka on December 24, 2009 to deal with Merchant Banking
business and started its commercial operation on March 10, 2010. ABIL is also a subsidiary
company of AB Bank Limited, provides all types of Merchant Banking services permitted
under existing law of the country. AB Bank Limited is the pioneer in banking industry,
started its Merchant Banking operation on 2003. Since its inception, AB Bank Merchant
Banking wing provided various services which include Issue Management, Portfolio
Management & Underwriting and gained an excellent reputation in the market. Subsequently
in 2010, under a regulation, AB Bank Limited has formed a subsidiary company namely AB
Investment Limited (ABIL) and shifted its existing Merchant Banking operations to the
ABIL. Their vision is to be trendsetter for innovative banking with excellence and perfection
and their mission is to be the best performing bank in the country.
2.2.5: IDLC Investment Limited- The first Lease Agreement was signed in 1985. Listed on
the Dhaka Stock Exchange in 1996. It gets licensed as a Merchant Banker by the Securities
and Exchange Commission in 1998. IDLC Investments Limited is a wholly-owned subsidiary
of IDLC, commences operations. IDLC offers Portfolio Management services to both
individual and institutional investors through their subsidiary, IDLC Investments Limited.
CHAPTER THREE
MERCHANT BANKS’ OPERATIONS IN BANGLADESH
3.1 : Definition of Merchant Banks
A merchant bank is a financial institution that engages in underwriting and business loans,
catering primarily to the needs of large enterprises and high net worth individuals. In the
British market, the term merchant bank refers to an investment bank. But there are some
differences between merchant and investment. These are given below:
Investment banks
 Investment banks raise assets for organizations and a few governments by enlisting
and giving obligation or value and selling it on a market.
 Investment banks just took an interest in guaranteeing and selling protections in
enormous squares.
 Investment banks encourage mergers and acquisitions through offer deals and give
research and money related counseling to organizations
 Investment banks center around introductory open contributions (IPOs) and huge open
and private offer contributions.
 Investment banks will in general spotlight on bigger organizations
 Investment banks once in a while offer exchange financing Merchant banks
Merchant Banks
 Merchant banks principally perform universal financing exercises, for example,

remote corporate contributing, outside land venture, exchange fund and worldwide
exchange assistance.
 Merchant banks likewise includes in giving letters of credit, moving assets globally,
exchange counseling and co-interest in tasks including exchange of some structure.
 Merchant banks will in general work on little scale organizations and offer innovative
value financing, connect financing and various corporate credit items.
 Merchant banks offer their administrations to organizations that are still little to make
a persuading open offer offering on an enormous trade
 Merchant banks offer exchange financing items to their customers.
3.2 : Functions of merchant banks
Merchant Banks provides both Banking and consultancy services. It provides consultancy to
its clients for financial, marketing, managerial and legal matters. Consultancy means to
provide advice, guidance and service for a fee. It helps a businessman to start a business. It
helps to raise finance. It helps to expand and modernize the business. It helps in restructuring
of a business. It helps to revive sick business units. It also helps companies to register, buy
and sell shares at the stock exchange.
The functions of merchant banking are listed as follows:
1. Raising Finance for Clients: Merchant Banking helps its clients to raise finance
through issue of shares, debentures, bank loans, etc. This finance is used for starting a
new business or project or for modernization or expansion of the business.
2. Helping in Project Management: Merchant bankers help their clients in the many
ways. Like advising about facility location although it is rare in our country, preparing
a project report, conducting feasibility studies, making a plan for financing the
project, finding out sources of finance, advising about concessions and incentives
from the government
3. Giving Advice on Expansion and Modernization: Merchant bankers give advice to
their clients for expansion and modernization of the business units. They help their
clients through giving expert advice on mergers and consolidations, acquisition and
takeovers, diversification of business, foreign collaborations and joint-ventures,
technology up- gradation, etc.
4. Managing Public Issue of Companies: Merchant bank advice and manage the public
issue of companies.
 They provide following services:
 Advise on the timing of the public issue.
 Advise on the size and price of the issue.
 Acting as manager to the issue, and helping in accepting applications and
allotment of securities.
 Help in appointing underwriters and brokers to the issue.
 Listing of shares on the stock exchange, etc.
5. Handling Government Permission for Industrial Projects : A businessman has to get
government permission for starting of the project. Similarly, a company requires permission
for expansion or modernization activities. For this, many formalities have to be completed.
Merchant banks do all this work for their clients.
6. Special Assistance to Small Companies and Entrepreneurs: Merchant banks help their
clients by giving advise small companies about business opportunities, government policies,
incentives and concessions available. It also helps them to take advantage of these
opportunities, concessions, etc.
7. Provide Services to Public Sector Units: Merchant banks offer many services to public
sector units. They help in raising long-term capital, marketing of securities, foreign
collaborations and arranging long-term finance from term lending institutions.
8. Portfolio Management: A merchant bank manages the portfolios (investments) of its

clients. This makes investments safe, liquid and profitable for the client. It offers expert
guidance to its clients for taking investment decisions.
9. Corporate Restructuring: It includes mergers or acquisitions of existing business units, sale

of existing unit or disinvestment. This requires proper negotiations, preparation of documents
and completion of legal formalities. Merchant bankers offer all these services to their clients.
10. Money Market Operation: Merchant bankers also helps in dealing with and underwrite
short-term money market instruments, such as:
 Government Bonds.
 Certificate of deposit issued by banks and financial institutions.
 Commercial paper issued by large corporate firms.
 Treasury bills issued by the Government.
11. Leasing Services: Merchant bankers also help in leasing services. Lease is a contract
between the lessor and lessee, whereby the lessor allows the use of his specific asset such as
equipment by the lessee for a certain period. The lessor charges a fee called rentals.
12. Management of Interest and Dividend: Merchant bankers help their clients in the
management of interest on debentures / loans, and dividend on shares. They also advise their
client about the timing (interim / yearly) and rate of dividend.
3.3 : Summary of the Chapter
According to the chapter, at first under the subheading of 3.1, the definition of the merchant
banks has been discussed. There, it’s also been discussed about the key differences between
the merchant banks and the investment banks of Bangladesh. Under the following subheading
3.2, different functions of merchant banks have been discussed that how they raise liquid or
securities from market, how they manage their clients, which way the manage their
portfolios, about their different services etc.
CHAPTER FOUR
ANALYSIS AND INTERPRETATION OF DATA
4.1 : Issue Manager
The list of IPOs managed by the selected 5 banks are given below:
2014 2015 2016 2017 2018
EBIL N/A N/A Doreen N/A Silva

Power Pharmaceuticals
Limited, Ltd, Indo-
Bangladesh Bangla
National Pharmaceuticals
Insurance Ltd, VFS
Company Thread Dyeing
Limited, The Ltd
ACME
Laboratories
ltd
CBCRL Ifad Autos N/A Pacific N/A N/A

Ltd Denim Jeans
Ltd
ABBIL N/A N/A N/A N/A N/A
LBIL The AMAN Evince Aamra Baraka Patenga

Peninsula Feed Textiles Networks Limited, Aman
Chittagong Limited, Limited Limited Tex Limited
Limited Regent
Textile
Limited,
United
Power
Generation
IDLCIL Matin Tosrifa N/A One Bank N/A

Spinning Industries Ltd
Mills, Far Ltd,
East Regent
Knitting Textile
and Dyeing Mills Ltd
Ltd
Table 1 List of Issue Manager
4.2 : Financial Statement Analysis
From the financial aspect of the 5 banks we will analyze their performance in two heads.
These are as follows:
1. Financial Ratios
2. Financial Heads related to the merchant bank activities
4.2.1 : Financial Ratios
The ratios that we have empowered for the 5 banks are as follows:
o Operational Profit Growth: Operational Profit Growth depicts the percentage of

increase or decrease of Operational Profit over the last year. A chart is given below:
Year EBIL CBCRL ABIL LBIL IDLCIL

2014 38.98% 92.77% 30.91% -1577.05% -126.37%
2015 -3.34% 7.03% -27.50% -7.55% 4.83%
2016 14.65% -15.22% 1.32% -58.70% 7.93%
2017 73.02% 13.84% -10.82% -136.62% 70.86%
2018 -52.45% -15.86% 16.42% -686.68% -60.21%
Table 2 Operational Profit Growth
OPG
200.00%
0.00%
-200.00%
2014 2015 2016 2017 2018
-400.00%
-600.00%
-800.00%
-1000.00%
-1200.00%
-1400.00%
-1600.00%
-1800.00%
EBL CITY AB LANKABANGLA IDLC
Figure 1 Operational Profit Growth Graph
From the chart and graph is seen that there has been a major downfall of Operational Profit
Growth for Lanka Bangla Investment Limited in 2014 and 2018. In the others year viz in
2015 to 2017 it maintained an average downfall. Among the five banks City Bank Capital
Resource Limited had the highest Operational profit Growth of 92.77% in 2014. Eastern
Bank Investment Limited, IDLC Investment Limited & AB Bank Investment Limited
maintained an average performance.
o Profit After Tax Growth- Profit After Tax growth measures the percentage change
in profit after tax over the years. A chart is given below:
Year EBIL CBCRL ABBIL LBIL IDLCIL

2014 64.20% 49.63% 24.63% -1745.63% -124.88%
2015 -28.92% 41.15% -82.00% 53.56% 124.80%
2016 99.33% 0.22% 2.70% -17.58% 42.54%
2017 61.95% 174.88% -97.30% -101.01% 62.59%
2018 -62.57% -22.43% 38.10% -11803.75% -34.89%
Table 3 Profit After Tax Growth
PATG
2000.00%
0.00%
-2000.00%
2014 2015 2016 2017 2018
-4000.00%
-6000.00%
-8000.00%
-10000.00%
-12000.00%
-14000.00%
EBL CITY AB LANKABANGLA IDLC
Figure 2 Profit After Tax Growth Graph
From the chart and graph it is seen that Lanka Bangla Investment Limited had a huge
downfall in profit after tax growth in 2018.The highest growth was accounted by City Bank
Capital Resources Limited. The other banks throughout the 5 year had an average growth.
o Return on Equity: Return on equity measures the profitability of five banks by how
much they generate with the shareholders have invested. A chart is given below
Year EBLIL CBCRL ABBIL LBIL IDLCIL

2014 8.30% 6.12% 6.94% -21.72% 37.90%
2015 5.92% 8.81% 5.57% -25.46% 8.52%
2016 11.20% 2.75% 5.64% -21.54% 12.15%
2017 19.30% 4.81% 0.13% 0.97% 10.20%
2018 6.74% 4.28% 0.08% -121.33% 6.23%
Table 4 Return on Equity
ROE
60.00%
40.00%
20.00%
0.00%
-20.00%
-40.00% 2014 2015 2016 2017 2018
-60.00%
-80.00%
-100.00%
-120.00%
-140.00%
EBLCITYABLANKABANGLAIDLC
Figure 3 Return on Equity Graph
From the chart and graph we see that IDLC Investment Limited had a good positive trend
throughout the five years. It recorded the highest ROE in 2014 which worth 37.90%. On the
other hand, Lanka Bangla Investment Limited had a negative run throughout the five years.
On the other hand, AB Bank Investment Limited’s ROE curve is going down throughout the
five years. EBL Investment Limited and City Bank Capital Resource Limited had a very good
run from 2014-2017 but it dropped down in 2018.
o Net Profit Margin- Net profit margin (NPM) is one of the most important indicators
of a business's financial health. It’s giving a more accurate view of how profitable the
merchant banks are than its cash flow. A chart is given below:
Year EBLIL CBRCL ABBIL LBIL IDLCIL

2014 47.73% 40.20% 10.37% -105.32% 67.40%
2015 35.10% 45.17% 11.93% -218.95% 38.97%
2016 61.03% 46.74% 11.84% -166.70% 52.73%
2017 57.93% 53.88% 0.29% 1.16% 51.23%
2018 45.45% 49.59% 0.22% -389.82% 70.17%
Table 5 Net Profit Margin
NPM
100.00%
0.00%
2014 2015 2016 2017 2018
-100.00%
-200.00%
-300.00%
-400.00%
-500.00%
EBLCITYABLAIDLC
Figure 4 Net Profit Margin Graph
From the chart and graph we see that IDLC Investment Limited had a good positive trend
throughout the five years. It recorded the highest Net Profit Margin in 2018 which worth
70.17%. On the other hand, Lanka Bangla Investment Limited had a negative run throughout
the five years. Moreover, AB Bank Investment Limited’s Net Profit Margin curve is going
down throughout the five years. EBL Investment Limited and City Bank Capital Resource
Limited had a very good run from 2014-2017 but it dropped down in 2018.
o Debt to Equity Ratio- A debt equity of 50% means that there are half as many
liabilities as there is equity. A chart is given below:

2014 9.60% 10.52% 13.03% 252.90% 90.11%
2015 10.06% 22.02% 11.51% 134.56% 42.31%
2016 15.35% 8.41% 12.62% 96.92% 65.72%
2017 41.99% 5.99% 12.81% 570.07% 82.55%
2018 28.19% 7.57% 13.24% 532.80% 35.44%
Table 6 Debt to Equity Ratio
DEBT TO EQUITY
600.00%
500.00%
400.00%
300.00%
200.00%
100.00%
2014 2015 2016 2017 2018

0.00%
EBILCBCRLABBILLBILIDLCIL
Figure 5 Debt to Equity Ratio Graph
From the chart and graph it is seen that Lanka Bangla Investment Limited has the highest
Debt to Equity Ratio. On the other hand, IDLC Investment Limited also have a high Debt to
Equity ratio. But the positive thing is that for both the banks the ratio began to depreciate in
2018.Moreover, City Bank Capital Resource Limited have a very low debt to equity ratio
from 2014 to 2018.EBL Investment Limited and AB Bank Investment Limited maintained an
average trend from 2014 to 2018.
o Earnings Per Share- Earning per Share serves as an indicator for a company’s
profitability. A chart is given below:

2014 0.09 0.68 2.37 -2 0.38
2015 0.06 0.9 2.12 -3.11 0.85
2016 0.12 0.29 1.94 -2.56 1.21
2017 0.2 0.78 0.04 0.03 0.33
2018 0.07 0.68 0.02 -2.37 0.32
Table 7 Earning Per Share
EPS
3
0 2014 2015 2016 2017 2018

-1
-2
-3
-4
Figure 6 Earning Per Share Graph
From the chart and graph it is seen that on average City Bank Capital Resource have a very
good Earning per share from 2014 to 2018.AB Bank had their good run in perspective of
Earning per share from 2014 to 2016 and then it began to reduce drastically. On the other
hand, Lanka Bangla Investment Limited have a negative trend from 2014 to 2016 at first then
it again became negative in 2018.
o Tax Management Efficiency- Tax Management Efficiency ratio measures what

percentage of a fund’s earnings are lost to taxation. A chart is given below:

2014 71.42% 73.76% 33.00% 99.39% 93.56%
2015 64.50% 79.11% 19.00% 100.27% 62.17%
2016 79.86% 75.30% 65.00% 100.00% 65.16%
2017 79.95% 70.53% 46.00% 100.00% 61.99%
2018 68.84% 74.05% 32.00% 100.17% 101.44%
Table 8 Tax Management Efficiency
Tax Management Efficiency
120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
2014 2015 2016 2017 2018

0.00%
Figure 7 Tax Management Efficiency Graph
From the chart and graph it is seen that Lanka Bangla Investment Limited and IDLC
Investment Limited are the most efficient banks in managing tax. Lanka Bangla Investment
Limited had an upward trend from 2014 to 2017 and has slopped-down a little in 2018.On the
other hand, IDLC has emerged as a new competitor of LBIL in case of Tax Management
Efficiency in 2018 where their ratio worth 101.44%.City Bank Capital Resource Limited and
EBL Investment Limited had a very average trend from 2014 to 2018.Only AB Bank
Investment Limited is the least efficient banks among the five banks.
4.2.2 : Financial Heads related to the merchant bank activities
o Investment in Securities: (Every calculation is in BDT million)
Year 2014 2015 2016 2017 2018

EBLIL -23.54 90.89 172.59 261.05 298.87
CBRCL 467.49 397.08 366.77 397 331.14
ABBIL 746.89 686.57 721.55 456.08 331.14
LBIL 325.46 2016.7 503.66 531.19 346.19
IDLCIL 410.08 437.31 159.28 177.79 163.06
Table 9 Investment in Securities
Investment in Securities
2500
2000
1500
1000
500
0
2014 2015 2016 2017 2018
-500
EBL CITY AB LA IDLC
Figure 8 Investment in Securities Graph
From the chart and graph it is seen that Lanka Bangla Investment Limited made the highest
investment worth BDT 2016.70 in 2015.But in the later years the curve for Lanka Bangla
Investment Limited started to follow downward trend. On the other hand, EBL Investment
Limited has an upward trend from 2014 to 2018. IDLC Investment in limited had a good
investment in securities from 2014 to 2015 but it began to decrease from 2016 and slumped
down to BDT 163.06 in 2018. City Bank Capital Resource Limited and AB Bank Investment
Limited maintained an average investment throughout the years.
o Margin Loans to client- (Every Calculation is in BDT Million)
Year 2014 2015 2016 2017 2018

EBLIL 48.05 5.94 10.07 118.66 171.09
CBRCL 205.56 203.81 223.66 262.42 422.29
ABBIL 710.7 699.03 722.97 680.9 699.27
LBIL 4262.86 3559.65 2473.8 1985.49 1538.26
IDLCIL 29.62 33.74 1300.5 1979.95 1538.26
Table 10 Margin Loans
Margin Loans
4500
4000
3500
3000
2500
2000
1500
1000
500
0
2014 2015 2016 2017 2018
EBL CITY AB LA IDLC
Figure 9 Margin Loans Graph
From the chart and graph it is seen that Lanka Bangla Investment limited used to give a good
amount of margin loans to its clients in 2014 but it began to decrease the amount from 2015
to 2018. IDLC Investment Limited gave a good amount of margin loans from 2014 to 2017
and slowed down in 2018. On the other hand, City Bank Capital Resource Limited is giving
its clients a good amount of margin loans from 2014 to 2018. AB Bank Investment Limited
and EBL Investment Limited gave margin loans to their clients at an average rate.
o Fees and Commissions- (Every Calculation is BDT Million)
Year 2014 2015 2016 2017 2018

EBLIL 2.69 5.68 7.73 16.63 17.98
CBRCL 18.15 40.35 44.54 67.49 77.25
ABBIL 69.33 44.14 42.52 54.04 28.02
LBIL 53.13 58.07 90.56 102.01 56.44
IDLCIL 46.24 38.5 20.02 58.63 31.13
Table 11 Fees and Commissions
FEES AND COMMISSIONS
120
100
80
60
40
20
2014 2015 2016 2017 2018

0
EBL CITY AB LA IDLC
Figure 10 Fees and Commissions Graph

From the chart and graph it is seen that fees and commission earned by EBL Investment
Limited and City Bank Capital Resource Limited for performing different services
(Brokerage, Portfolio Management, Documentation etc.) is having an upward trend from
2014 to 2018. IDLC Investment Limited and Lanka Bangla Investment Limited had some ups
and downs from 2014 to 2017 but it began to earn less fees and commission in 2018. On the
other hand, AB Bank Investment Limited is showing a downward trend from 2014 to 2018.
o Interest Income from Merchant Bank Activities: (Every Calculation is in BDT

Million)
Year 2014 2015 2016 2017 2018

EBLIL 400.92 354.51 522.95 574.47 750.62
CBRCL 512.3 550.6 647.7 749.5 920.5
ABBIL 607.88 427.93 283.7 267 191.01
LBIL 26.68 138.62 186.75 208.11 237.75
IDLCIL 284.92 319.67 353.03 310.45 392.58
Table 12 Interest Income
Interest Income
1000
900
800
700
600
500
400
300
200
100
0
2014 2015 2016 2017 2018
EBL CITY AB LA IDLC
Figure 11 Interest Income Graph
From the chart and Graph it is seen that City Bank Capital Resource Limited is earning a
good amount of interest from 2014 to 2018.EBL Investment Limited and IDLC Investment
Limited had some up and down in 2015 and 2017 but is maintain a upward trending in
2018.Lank Bangla investment Limited is earning an average interest from 2014 to 2018.But
AB Bank Investment Limited is not earning a good amount of interest from 2014 to 2018.
o Investment Income from securities- (Every Calculation is in BDT million)
Year 2014 2015 2016 2017 2018

EBLIL 18.7 14.05 25.63 62.87 7.17
CBRCL 82.33 75.96 82.93 257.43 180.51
ABBIL 22.62 0.25 7.9 19.55 13.19
LBIL 38.62 34.13 67.04 14.26 -17.06
IDLCIL -16.86 0 28.41 46.55 59.81
Table 13 Investment Income
Investment Income
300
250
200
150
100
50
0
-50
2014 2015 2016 2017 2018
EBL CITY AB LA IDLC
Figure 12 Investment Income Graph

From the chart and graph it is seen that IDLC Investment Limited is earning a good return
from its investment in securities from 2014 to 2018. AB Bank Investment Limited is getting
an average return from its investment in securities throughout the five years. City Bank
Capital Resource Limited earned a good return from 2014 to 2017 but it reduced in
2018.Lanka Bangla Investment Limited began to get less returns from 2016 to 2018.EBL
Investment Limited maintained an average return from 2014 to 2017 but it began to get less
in 2018.
4.3 : Practices in the selected Merchant Banks:
In order to find out the practices carried out in our selected banks we have done a survey on
the basis of the operations performed by a Merchant Bank. From descriptive analysis by
SPSS we have extracted the following results:
i. The bank is helping in raising funds for its clients:
The bank is helping in raising funds for its clients
Cumulative
Frequency Percent Valid Percent Percent
Valid Strongly Disagree
3 2.0 2.0 2.0
Disagree 2 1.3 1.3 3.3

Neutral 8 5.3 5.3 8.7
Agree 88 58.7 58.7 67.3
Strongly Agree 49 32.7 32.7 100.0
Total 150 100.0 100.0
Table 14 Frequency Table of Factor 1
ii. The bank is helping in project management activities:
The bank is helping in project management activities (like advising,

preparing project report, sourcing finance etc.)
Cumulative
Valid Strongly
3 2.0 2.0 2.0
Disagre
e
Disagree 8 5.3 5.3 7.3
Neutral 29 19.3 19.3 26.7
Agree 73 48.7 48.7 75.3
Strongly Agree 37 24.7 24.7 100.0
Total 150 100.0 100.0
iii. The Bank is managing public issues of different companies:
The bank is managing public issues of different companies
Cumulative
Valid Strongly
5 3.3 3.3 3.3
Disagree
Disagree 15 10.0 10.0 13.3
Neutral 33 22.0 22.0 35.3
Agree 57 38.0 38.0 73.3
Strongly Agree 40 26.7 26.7 100.0
Total 150 100.0 100.0
iv. The bank is handling Government permission for handling Industrial project:
The bank is handling Government Permission for Industrial Project

Cumulative
Valid Strongly
53 35.3 35.3 35.3
Disagree
Disagree 55 36.7 36.7 72.0
Neutral 38 25.3 25.3 97.3
Agree 4 2.7 2.7 100.0
Total 150 100.0 100.0
v. The bank is advising its clients for modernization and expansion:
The bank is providing advice to its clients on expansion and

modernization
Cumulative
Valid Disagree 6 4.0 4.0 4.0
Neutral 25 16.7 16.7 20.7
Agree 73 48.7 48.7 69.3
Strongl
46 30.7 30.7 100.0
y Agree
Total 150 100.0 100.0
vi. The bank supports short and medium business enterprises:
The bank is supporting the SMEs
Cumulative
Valid Neutral 34 22.7 22.7 22.7
Agree 67 44.7 44.7 67.3
Strongl
49 32.7 32.7 100.0
y Agree
Total 150 100.0 100.0
vii. The bank is providing service to public sectors:
The bank is providing service to public sector units
Cumulative
Valid Strongly
3 2.0 2.0 2.0
Disagree
Disagree 15 10.0 10.0 12.0
Neutral 34 22.7 22.7 34.7
Agree 65 43.3 43.3 78.0
Strongly Agree 33 22.0 22.0 100.0
Total 150 100.0 100.0
viii. The bank is involved in portfolio management:
The bank is involved in portfolio management
Cumulative
Valid Strongly
8 5.3 5.3 5.3
Disagree
Disagree 11 7.3 7.3 12.7
Neutral 17 11.3 11.3 24.0
Agree 59 39.3 39.3 63.3
Strongly Agree 55 36.7 36.7 100.0
Total 150 100.0 100.0
ix. The bank is involved in money market operations:
The bank is also involved in money market operations
Cumulative
Valid Strongly
2 1.3 1.3 1.3
Disagree
Disagree 5 3.3 3.3 4.7
Neutral 22 14.7 14.7 19.3
Agree 57 38.0 38.0 57.3
Strongly Agree 64 42.7 42.7 100.0
Total 150 100.0 100.0
x. The bank is helping its clients in corporate restructuring:
The bank is helping its clients in corporate restructuring
Cumulative
Valid Disagree 2 1.3 1.3 1.3
Neutral 27 18.0 18.0 19.3
Agree 67 44.7 44.7 64.0
Strongl
54 36.0 36.0 100.0
y Agree
Total 150 100.0 100.0
xi. The bank provides leasing service:
The bank is providing leasing service
Cumulative
Valid Neutral 35 23.3 23.3 23.3
Agree 70 46.7 46.7 70.0
Strongl
45 30.0 30.0 100.0
y Agree
Total 150 100.0 100.0
xii. The bank manages and interest and dividend:
The bank manages interest and dividend
Cumulative
Valid Neutral 33 22.0 22.0 22.0
Agree 60 40.0 40.0 62.0
Strongl
57 38.0 38.0 100.0
y Agree
Total 150 100.0 100.0
From the descriptive analysis done on the selected five banks it is seen that they are
functioning maximum operations of an ideal merchant bank but they are not performing the
operation of handling Government permission for Industrial project on behalf of their clients.
4.4 : Summary of the Chapter
Under this chapter, at the first subheading 4.1, different firms have been mentioned where the
five merchant banks invested for the year 2014 to 2018. In the following subheading 4.2, the
analysis of different financial ratios for the year 2014 to 2018 of those five merchant banks
has been discussed. Besides, different financial heads like security investment, margin loan to
client etc. which are related to the activities of merchant banks have been also discussed in
this subheading. In 4.3, different practices of the selected merchant banks have been analyzed
by doing a descriptive analysis. Data has been being collected from field survey.
CHAPTER FIVE
FINDINGS AND RECOMMENDATIONS
5.1 : Findings of the Study
After a deep study and analysis, the following things of merchant banks in Bangladesh are
found as result:
o The selected merchant banks are generating employment opportunities for the
future generations of the country. Besides, the profitability is also satisfactory.
o Fees and commissions are fluctuating heavily in the five years.
o Merchant bankers are authorized to undertake only issue related tasks which
reduces their scope of activities.
o AB Bank Investment Limited have no IPO issues yet. Again, as the Non-
performing Loan rate is high it may be a big threat for the merchant banks.
o Before publishing any news, merchant banks gather news about different
companies.
o The banks are capable of managing tax efficiently but there is scope of
development for them.
5.2 : Recommendations
The recommendations those have been traced out after the deep study are as follows and those
may be beneficial for the mentioned merchant banks as well:
o Fees and Commissions of the selected banks are fluctuating very frequently and the
growth is also very less. The banks should concentrate in this field.
o Lanka Bangla Investment Limited and AB Bank Investment Limited should increase
their Investment in securities.
o Lanka Bangla Investment Limited should focus on its Income and Expenses head as
its net profit generated after tax is very poor among the four banks selected.
o AB Bank Investment Limited should focus on their Interest Income earning and it
should be resolved quickly with a long-term purpose.
o AB Bank Investment Limited should develop their Tax Management method more
efficiently by employing new policies.
o As Non-Performing loan rate is increasing the Merchant Banks should grant loans to
their respective clients by analyzing their profile extensively for the bank’s own
betterment.
CHAPTER SIX
SUMMARY, POLICY IMPLICATIONS AND CONCLUSION
6.1 : Summary of the Findings
The study was all about the operations of merchant banks in Bangladesh. Merchant banks
perform a lot of activities like raising of funds from market, investment to the firms who
require fund as internal or external liability, handling of portfolios, dealing with public issues
etc. The financial performance of these sorts of banks has also been determined by doing the
analysis of the financial statements of last five years. Apart from that, different practices of
the selected merchant banks have also been analyzed through descriptive analysis. Through a
field study, different practices of the mentioned merchant banks have been observed.
Through choosing different variables those are common to the majority of the banks, analysis
was done on individual banks to know about the intensity level of using those variables. And
that’s how the result is being found out which are mentioned in the previous chapter.
6.2 : Policy Implications
In the previous works on Merchant Banks it was solely focused on the idea of Merchant
Banking and its future aspect in the Indian Sub-continent and global economy. In this study,
it’s been also first focused on the idea of Merchant Banking. Then the incorporation of a brief
history of Merchant Bank in Bangladesh has been included. Thirdly, probe out the activities
or role performed by the merchant banks of Bangladesh and analyzed it through comparative
analysis have been ensured. Lastly, the recommendations of some beneficial suggestions for
the betterment of the banks have been added as well.
6.3 : Conclusion
A merchant bank is a company that conducts underwriting, loan service financial advising,
and fundraising services for large corporations and high net worth individuals. The
establishment of merchant bank added value to the stock market which plays a vital role in
the progress of economic development. The purpose behind furnishing this paper is to study
and evaluate operations of different merchant banks of Bangladesh. For these five renowned
merchant banks has been chosen, other sources of data collection are different business
portals (offline and online both), finance related websites of Bangladesh. The findings from
this paper not only Banks but also merchant banks are contributing towards the economic
development of a country. By analyzing its operations performed and financial performance,
it is observed that a potential growth might be accelerated through effective implications of
some policy. In conclusion, if the Merchant Banks Bangladesh are well administered, it will
have a great role in the rapid economic development of Bangladesh.
REFERENCE
Shreyas, B. S. (2014). Merchant Banking Past and Present: Indian Scenario. International
Journal of Business and Management, 2(10), 184-186.
Eastern Bank Limited Annual Report (2014-2018), from

https://www.ebl.com.bd/home/Annual_Reports
Keyurkumar, D., & M, Nayak. (2015). Does Public Sector Merchant Banks Require Pills to
Survive? Indian journal of applied research, 5(1).
City Bank Annual Report (2014-2018), from

https://www.thecitybank.com/report/annualreports
Morton, J., Niederjohn, S., & Thomas, S. (2010). Financial Markets.
AB Bank Annual Report (2014-2018), from http://abbl.com/reports/
Investment Banks vs Merchant Banks, from

https://www.investopedia.com/ask/answers/05/investmentbank_vs_merchantbank.asp
Lanka Bangla Finance Limited Annual Report (2014-2018), from

https://www.lankabangla.com/downloads/
Mizanur Rahman (2012). Merchant Banking Operations in Bangladesh.from

https://www.scribd.com/doc/96165315/Merchant-Banking-Operations-in-Bangladesh
IDLC Annual Report (2014-2018).from https://www.idlc.com/investor-relations-reports.php
Merchant Banks and Financial Institutions of Bangladesh, from http://bfi-bd.com/merchant-

bank
Dhaka Stock Exchange IPO Issue List, from https://www.dsebd.org/ipo.php

Chattagram Stock Exchange IPO Issue List, from
https://www.cse.com.bd/company/ipo_fixed
APPENDIX
1. Financial Statement of EBL Investment Limited 2018-

Figure 13 Financial Statement of EBLIL
2. Financial Statement of AB Bank Investment Limited 2014
Figure 14 Financial Statement of ABBIL
3. Financial Statement of City Bank Capital Resource Limited
Figure 15 Financial Statement of CBCRL
4. Financial Statement of Lanka Bangla Investment Limited
Figure 16 Financial Statement of LBIL
5. Financial Statement of IDLC Investment Limited
Figure 17 Financial Statement of IDLCIL
6.
Figure 18 Pie Chart of Responses for Factor 1
7.

8.
9.

10.
Figure 22 Pie Chart of responses for Factor 5
11.

12.
13.

14.

15.

16
17.
Figure 29 Pie Chart of Responses for factor 12

18.
Figure 30 Questionnaire Part 1
19.
Figure 31 Questionnaire part 2

20.
Figure 32 Questionnaire Part 3

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Merchant Banking Operations in Banglades

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Term Paper on

Merchant Banking Operations in Bangladesh

Date of submission: November 3, 2019

Fahim Ahmad 17221031

Syeda Sumya Zaman 17221033

Mrittika Sadi 17221035

Labib Hasnath 17221037

Ekhtear Ahmed 17221039

Md Mostafa Asef Rafi 17221041

Samin Sakib 17221045

Khondokar Md. Abu 17221047

Fathan Sakib 17221049

Jenifer Trisha 17221051

Syeda Sumya Zaman

Md Mostafa Asef Rafi

Khondokar Abu Syed Saikat

Department of Business Administration in Finance and Banking

Date of Submission: 3rd Novemeber.2019

Thanks to all of you

EBIL Eastern Bank Investment limited

CBCRL City bank Capital Resource Limited

ABBIL AB Bank Investment Limited

LBIL Lanka Bangla Investment Limited

IDLCIL IDLC Investment Limited

TABLE 1 LIST OF ISSUE MANAGER................................................................................................................... 18

FIGURE 1 OPERATIONAL PROFIT GROWTH GRAPH..................................................................................... 19

In order to scrutinize the functions rendered by the merchant banks of Bangladesh

1.2 : Statement of the Problem

1.4 : Methodology of the study

Cronbach's Alpha N of Items

Case Processing Summary

1.5 : Scope and Rationale of the Study

1.6 : Limitations of the Study

1.7 : Organization and Structure of the Study

The idea of merchant banking is in an improvement stage in our nation. Administrative

2.2.3: LankaBangla Investment Limited- LankaBangla Investments Limited (LBIL) a fully

2.2.4: AB Bank Investment Limited- AB Investment Limited (ABIL), a company limited

 Merchant banks principally perform universal financing exercises, for example,

The functions of merchant banking are listed as follows:

8. Portfolio Management: A merchant bank manages the portfolios (investments) of its

9. Corporate Restructuring: It includes mergers or acquisitions of existing business units, sale

3.3 : Summary of the Chapter

2014 2015 2016 2017 2018

EBIL N/A N/A Doreen N/A Silva

CBCRL Ifad Autos N/A Pacific N/A N/A

ABBIL N/A N/A N/A N/A N/A

LBIL The AMAN Evince Aamra Baraka Patenga

IDLCIL Matin Tosrifa N/A One Bank N/A

Table 1 List of Issue Manager

4.2 : Financial Statement Analysis

4.2.1 : Financial Ratios

o Operational Profit Growth: Operational Profit Growth depicts the percentage of

Year EBIL CBCRL ABIL LBIL IDLCIL

EBL CITY AB LANKABANGLA IDLC

Figure 1 Operational Profit Growth Graph

Year EBIL CBCRL ABBIL LBIL IDLCIL

EBL CITY AB LANKABANGLA IDLC

Figure 2 Profit After Tax Growth Graph

Year EBLIL CBCRL ABBIL LBIL IDLCIL

Figure 3 Return on Equity Graph

Year EBLIL CBRCL ABBIL LBIL IDLCIL

Figure 4 Net Profit Margin Graph

Year EBIL CBCRL ABBIL LBIL IDLCIL